Legal Question in Business Law in California

Re: My employer paid me under the table and now I am suffering because of it.

I do not see how this is your employer's fault. You were actually operating your own business when you accepted the 1099 payments. You accepted the tax benefits (by not having anything withheld, including for social security or medicare), and you were actually operating as an independent contractor.

Using the employer's adress would not have saved on the business license fee, and could have gotten you into hot water with the IRS (as well as the local licensing agency).

I see no way for you you to amend your taxes because you were not an amployee of the company, however you might wish now that you were. And no, it is not illegal to pay an independent contractor for more than a year of services.

Your mistake was not in claiming to operate a business (because you were, and properly filed a schedule C), but in operating the business in the first place, if you did not wish to. If you did not wish to be a 1099 independent contractor, then you should have insisted that your employer withhold taxes rather than paying you in cash. You cannot blame the hand that feeds you for your own mistake in negotiating your relationship. The company has no obligation or even any right to pay the business tax that has been assessed against you.

Re: My employer paid me under the table and now I am suffering because of it.

Paying "under the table" and accepting "under the table" payments is a two-way street. If the actual business relationship warranted 1099 independent contractor status, you and your employer made a legally-correct election, and each of you is bound by the tax, workers' comp, unemployment insurance, social security and other legal consequences.

If, on the other hand, you and the employer agreed on "1099" independent contractor status when in fact you should have been classified as a W-2 employee, they you're equally guilty of a fraud on the taxing, etc. powers, and both must live with the consequences of your decision to evade the law.

The fact that you characterize the payments as "under the table" is an admission that you knew it was wrong, or at least highly suspect.

So, guess what! You are a self-employed person who is operating a business. File and pay your taxes accordingly. Don't be looking for additional ways to cheat, such as misrepresenting where you are carrying on your business. File and pay your self-employment taxes. Accept responsibility for being what you claimed to be, an independent businessperson.

Re: My employer paid me under the table and now I am suffering because of it.

While I completely understand where my fellow attorneys are coming from, and, in theory, I believe what they say is correct, this area of law is a bit more complex than they make out. In fact, the California Division of Labor Standards has issued opinion letters on when an "independent contractor" is actually an employee. These opinions are available on the internet at http://www.dir.ca.gov/dlse/OpinionLetters-bySubject.htm. I understand that in many industries it is common practice for employers to bully people into 1099 status and being paid under the table. That does not magically transform employees into business owners. However, hopefully this will help you make better decisions about whom you work for and not agreeing to cheat the system (work "under the table"). I pay my taxes, so should every one else.

Good luck.